It’s been a tough week for Chinese ecommerce giant JD.Com Inc(ADR) (NASDAQ:JD). The company’s stock dropped from $39.80 to $37 – or about 7%.  This means that JD stock has been mostly dead money for the past year or so.

Now the main reason for this week’s drop was a disappointing earnings report. While revenues beat the Street estimates, $16 billion versus $15.5 billion, the bottom line was a different matter. Earnings came to 11 cents a share, while the consensus was calling for 14 cents.

Keep in mind that JD has been investing aggressively in its infrastructure/logistics as well as its physical stores. There is also the pressure from fierce competitive forces in China, especially from powerhouse Alibaba Group Holding Ltd (NYSE:BABA).

In the meantime, there are other fears. The growing tensions between the U.S. and China remain a wildcard, as both countries lob tariffs on each other.

Yet I think the recent weakness in JD stock is still an interesting opportunity. If anything, investors have a chance to pick up a standout player in the Chinese market at a reasonable valuation.

So let’s take a look at 3 reasons to be bullish on the JD stock:

Investing For Growth

The deterioration in margins is certainly a risk factor. But then again, JD.com is looking at the long-term. In other words, the company is willing to sacrifice short-term profits for long-term growth.

It’s definitely a spot-on strategy. Just look at the huge success of Amazon.com, Inc. (NASDAQ:AMZN).

Now a big part of the investment focus for JD has been on expanding the distribution network. In the latest quarter, JD.com added 29 warehouses – for a total of 515. This means there is a whopping 10.9 million square feet of space.

But the warehouses are not just for JD. Note that the company has been able to monetize this network by selling access to over 20,000 merchants. This is likely to be a nice source of recurring revenues.

Next, JD.com has been investing heavily with its partners. One example is the WeChat Store Mini platform, which is a part of TENCENT HOLDING/ADR (OTCMKTS:TCEHY). This service makes it possible to build ecommerce stores on China’s most popular messaging app.

Finally, JD. has been investing in next-generation technologies like cloud computing, machine learning and AI (Artificial). All of these are likely to be critical in making the company more competitive.

Secular Growth Trends

China still represents a massive growth opportunity, and yes, JD stock is nicely positioned to benefit. JD.com has significant scale, a strong ecosystem of partners and a top-notch brand.

In terms of the growth dynamics in China, here are just a few things to consider:

• The middle class in China is expected to hit 600 million by 2022. By comparison, the total population in the U.S. is 320 million.
• China’s working population is a whopping 770 million, compared to only 146 million in the U.S.
• E-commerce spending is forecasted to jump from $470 billion in 2017 to $839.54 billion by 2021.

All in all, there is quite a bit of runway left for JD.com.

Valuation

The valuation on JD stock is reasonable, with the price-to-sales ratio at only 0.92%. AMZN, on the other hand, is at 4.3X.  Wall Street analysts also see opportunity. Note that the average price target is $49.20, which implies 32% upside.

So for investors looking for a fairly cheap way to play the major secular trends in China, JD.com certainly is worth considering.

Tom Taulli is the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.